Business Law Chapter 4

Front 1

Explain the function of contract law.

Back 1

Contract law determines which agreements will be enforced by the courts and which will not.

Front 2

Compare and contrast a bilateral contract with a unilateral contract.

Back 2

A unilateral contract is a promise given in exchange for an act. It is accepted by performing the specified act. A bilateral contract is a promise given in exchange for another promise. The exchange of promises represents consideration and makes the promises binding.

Front 3

Define the concept of agreement.

Back 3

a valid contract requires an offer and acceptance resulting in agreement.

Front 4

Explain the elements of a valid offer.

Back 4

1. the offeror has an intention to be bound by the offer 2. the terms of the offer are reasonably definite 3. the offer is communicated to the offeree.

Front 5

Compare and contrast subjective intent with objective intent.

Back 5

courts will evaluate the offeror's outward expression of intent(objective intent), not his or her secret intention (subjective intent.)

Front 6

Explain why advertisements are generally not valid offers.

Back 6

Sellers do not have an unlimited ability to provide services or an unlimited supply of goods. If advertisements were offers, then who "accepted" could sue the seller for breach of contract if the seller's supply ran out.

Front 7

Explain how an offer may be terminated by either the offeror or the offeree.

Back 7

The offeror can revoke its offer at any time before the offeree accepts. It is also terminated is the offeree rejects it. A counteroffer is also a rejection of the origial offer.

Front 8

Define the term revocation.

Back 8

to annul an offer by recision.

Front 9

Explain what an option contract means.

Back 9

A contact in which the offeror promises to hold an offer open for a certain amount of time.

Front 10

Explain the concept of detrimental reliance.

Back 10

occurs when an offeree has changed his or her position because of justifiable reliance on an offer.

Front 11

Explain the concept of promissory estoppel.

Back 11

A promise that the promisor should reasonably expect to induce action or forbearance on the part of the promissee or a third person and that does induce such action or forbearance can create liability for reliance damages if injustice can be avoided only by providing some relief when promise is broken.

Front 12

Explain the ways an offer may be terminated by operation of law.

Back 12

An offer terminates when the time of acceptance specified by the offeror has elapsed or at the end of a reasonable period if the offeror did not specify a time. Death or incapacitation of either party terminates an offer, as does destruction of the subject matter.

Front 13

Explain the concept of acceptance.

Back 13

An agreement to the amount offered for certain services or products. Acceptance may be verbal, written, or implied by action.

Front 14

Explain the mirror-image rule.

Back 14

A traditional rule of contract formation that requires the offeree's acceptance to be a mirror image of what the offeree has offered.

Front 15

Define the concept of consideration.

Back 15

A thing of value (money, services, an object, a promise, forbearance, or giving up the right to do something) exchanged in a contract.

Front 16

Explain the concept of contractual capacity.

Back 16

the ability (requisite presence of mind) to enter into a binding contract.

Front 17

Explain the concept of undue influence.

Back 17

sufficient influence and power over another as to make genuine assent impossible .

Front 18

Define fiduciary relationship.

Back 18

a person having a duty to act primarily for the benefit of another in matters connected with connected with undertaking fiduciary responsibilities; the obligatin of a trustee or other fiduciary to act for the benefit of the other party.

Front 19

Explain the concept of duress.

Back 19

coercion

Front 20

Explain the term that is oppressive or fundamentally unfair.

Back 20

a contract term that is oppressive or fundamentally unfair.

Front 21

Define adhesion contract.

Back 21

an unfair type of contract by which sellers offer goods or services on a take-it-or-leave-it basis, with no chance for consumers to negotiate for goods except by agreeing to the terms of said contract.

Front 22

Define illegal contract.

Back 22

a contract is illegal if its formation or performance is expressly forbidden by a civil or criminal statute, or if a penalty is imposed for doing the act agreed upon.

Front 23

Define the Statute of frauds.

Back 23

a statute that requires that certain contracts, such as contracts conveying an interest in real property, must be in a signed writing to be enforceable in a court.

Front 24

Define the parole evidence role.

Back 24

if there is a written contract that the parties intended would encompass their entire agreement, oral evidence of a prior or contemporaneous statements will not be permitted to vary or alter the terms of the contract.

Front 25

Define the concept of privitity of contract.

Back 25

the necessity for a person injured by a product to be in a contractual relationship with the seller of the product in order for the injured person to recover damages.

Front 26

Define the concept of third party.

Back 26

on who does not give consideration for a promise yet has legal rights to enforce the contract. A person is a third-party beneficiary with legal rights when the contracting parties intended to benefit that person.

Front 27

Define anticipatory repudiation.

Back 27

if a party indicates before performance is due that it will breach the contract, there is an anticipatory repudiation of the contract.

Front 28

Define novation.

Back 28

the method of contract modification by which the oriiginal contract in canceled and a new one is written with perhaps only one change, such as substitution of a new party.

Front 29

Define accord and satisfaction.

Back 29

an agreement to accept performance that is difference from what is called for in the contract.

Front 30

Compare and contrast impossibility and impracticability of performance and what is required for each defense.

Back 30

Impossibility is an excuse for nonperformance based on the destruction of something vital to the performance of the contract or another unforeseen event that makes performance of the contract impossible. Impracticability is a situation in which performance is possible but is commercially impractical.

Front 31

Define restitution.

Back 31

an award made to a plaintiff of a benefit improperly obtained by the defendent.

Front 32

Define and explain specific performance.

Back 32

a court order to a breaching party to complete the contract as promised.

Front 33

Compare and contrast a rejection with a counteroffer.

Back 33

A rejection is when the offeree rejects the offer made by the offeror. A counteroffer is a new offer by the original offeree.

Front 34

Explain the mailbox rule.

Back 34

a contract is formed when the letter is put in the mailbox; the offeror cannot thereafter revoke the offer.

Front 35

Explain when a contract entered into by a mentally competent person will be valid.

Back 35

If the person was able to understand the nature and effect of the agreement then even if he or she lacked capacity to engage in other activities, the contract is valid, with no voidability option.

Front 36

Explain when a contract entered into by a mentally incompetent person will be void.

Back 36

if a court has adjudged the party incompetent and appointed a guardian for him or her, the contract is void.

Front 37

Explain when a contract entered into by a mentally incompetent person will be voidable.

Back 37

if the party simply lacked mental capacity to comprehend the subject matter, the contract is voidable.

Front 38

Compare and contrast assignment with delegation.

Back 38

Contract rights are assigned, while contract duties are delegated.